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LawPulse

Foreclosure mediation programs finding homes throughout the state

By

Adam&nbspW.&nbspLasker

A McLean County program puts homeowners and lenders together with mediators to help work out agreements and uses U of I law students to represent homeowners in mediation.

Coordinators of a new foreclosure-mediation program in McLean County hope to expedite foreclosure litigation, clear up the court's docket, and help make the process a little more user-friendly for people at risk of losing their homes.

The program, launched on March 1 in the 11th Judicial Circuit, is similar to a handful of other new foreclosure procedures and programs being implemented around the state, and its organizers hope they are at the early end of what will continue to be a growing trend in Illinois courts.

The voluntary program in McLean County allows homeowners facing foreclosure to meet with a neutral mediator who will facilitate face-to-face communications between the owners and representatives from the lending institutions. The mediators will work to obtain agreements between the parties for ways in which the lenders can recover some of the value of the properties without the need for a full-blown foreclosure.

A voluntary approach

"There are a number of issues in the foreclosure process that make it a difficult time for the homeowners," said Stacey L. Tutt, who is a clinical professor and director of the Community Preservation Clinic at the University of Illinois College of Law. "The biggest difficulty is with borrowers being able to communicate with the lenders to obtain modifications to the loans without the need to foreclose. This mediation program is an opportunity to get the parties at the table sharing information in hopes of developing an effective resolution to the case."

Tutt worked with 11th Circuit Chief Judge Elizabeth Robb in developing the program, which Tutt said is loosely modeled after a similar program in Peoria County. Tutt said she studied other programs in Cook and Will counties, but she and Robb agreed to adopt the voluntary nature of Peoria's program and to incorporate students from the U of I Community Preservation Clinic as pro bono 711 lawyers who will help represent the interests of the homeowners.

"In McLean County, the size of our community and the close networks [of homeowners and local lending institutions] has allowed us to set up this system in a way that hopefully will maximize participation and reduce barriers for homeowners," Tutt said. "I think this program is particularly helpful given the current economy, in which foreclosures are not only having a significant impact on the homeowners, but on our community as a whole."

Judge Paul G. Lawrence, who will supervise the 11th Circuit mediation program, said it is reasonable for coordinators to hope the program will speed up foreclosure litigation, and he believes any increase in communication between the homeowners and the lenders could increase the number of cases that will settle rather than be fully litigated.

"Our experience [as judges] has been that often times when the borrowers show up in court and approach the bench, and the lender is there, the borrowers often mention a frustration of not being able to communicate effectively with the lenders," Lawrence said. "Usually they're trying to speak not to a local bank, but perhaps a headquarters in Chicago or New York and it's just hard - so many times it just never gets done and we were getting a little frustrated.

"If we can get the parties together with a mediator in there to get them talking with each other, we can reach an agreement that will benefit both the bank and the homeowner, and hopefully get our cases resolved in a more timely fashion," he said.

Lawrence said there were 574 foreclosure cases filed in 2010 in McLean County. "That's a lot of cases for down here," he added, "and it's gone up considerably over the past couple of years - they dominate our docket."

Students "see the positive impact they're making"

As of March 1, all foreclosure actions filed in McLean County will be subject to a new $25 filing fee, and Lawrence said lenders will be required to serve a special summons on homeowners informing them of their right to participate in the voluntary mediation program.

Lawrence also said he believes the U of I law students will be a valuable resource for the homeowners. When he was a law student, Lawrence worked for a summer as an attorney in his local state's attorney's office pursuant to Illinois Supreme Court Rule 711.

"I had a great experience as a 711 lawyer and I'm sure these students will as well," Lawrence said. "They'll be supervised by Stacey Tutt, so I'm sure they will enjoy the experience and learn from it, at the same time that they provide valuable services to the borrowers."

Tutt said the cooperation from the McLean County judges has been a key factor in implementing the new program, and she is thankful the judiciary is also making this an educational experience for her students.

"It's a win-win program because it gives us an opportunity to give back to our community and to help in our own backyard, while also giving students very valuable experience so that when they graduate they are better suited to join the legal community," Tutt said. "The commitment level of these students is just amazing - they work throughout the night and they really see the positive impact they're making in their lives and the lives of the people they are helping."